The Hanford Story

This 2011 multimedia presentation provides an overview of the Hanford Site—its history, cleanup activities, and a glimpse into the possibilities of future uses of the 586-square-mile government site in southeast Washington State.

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This 2011 multimedia presentation provides an overview of the Hanford Site—its history, cleanup activities, and a glimpse into the possibilities of future uses of the 586-square-mile government site in southeast Washington State.

By

Richland, WA

The Department of Justice filed a civil lawsuit Friday against Hanford contractor Mission Support Alliance, accusing it of defrauding the federal government out of tens of millions of taxpayer dollars.

Also named in the lawsuit are former Mission Support Alliance President Frank Armijo, Lockheed Martin Corp. and Lockheed Martin Services Inc.

“We disagree with the allegations made by the Department of Justice that MSA or its employees engaged in any wrongdoing,” Mission Support Alliance said in a statement Friday. “We look forward to presenting a strong defense in this matter.”

Lockheed Martin also said it categorically denied the allegations made against it and Armijo.

The Justice Department is accusing Mission Support Alliance of using half-truths, omissions, kickbacks and outright lies before its purchase by Leidos to get the Department of Energy to consent to a $232 million subcontract to a company with which it had ownership ties.

Lockheed Martin Corp. was a principal owner of Mission Support Alliance in 2010, when Mission Support Alliance awarded a subcontract for information technology services at Hanford to Lockheed Martin Services Inc.

The lawsuit alleges that from 2010 to 2015 the defendants misrepresented billing rates charged to DOE, the effort estimated to be needed to complete work and the anticipated additional profit for the subcontractor.

The 580-square-mile Hanford nuclear reservation is contaminated from the past production of plutonium for the nation’s nuclear weapons program.

Courtesy Department of Energy

“Defendants’ fraud allowed them to obtain grossly inflated and improper additional profit on the subcontract,” the Justice Department said in a news release.

The lawsuit said that estimates of costs for payment rates were inflated in some cases by basing them on far more employees to perform work than Lockheed Martin Services Inc. included in its internal budget.

In some cases DOE was billed by both Mission Support Alliance and Lockheed Martin Services Inc. for the same labor, the lawsuit said.

‘Grossly inflated pricing’ claims

The profit paid for Lockheed Martin Services Inc. work was in addition to money Lockheed Martin Corp. was already earning on the same work through its partial ownership of Mission Support Alliance, according to the Justice Department.

DOE repeatedly made clear that the subcontractor, Lockheed Martin Services Inc., could not earn profit on top of what its owner was already being paid through Mission Support Alliance, the lawsuit said.

Armijo, and Rich Olsen, the Mission Support Alliance chief financial officer, also worked on behalf of Lockheed Martin Corp. and misused their positions at Hanford to help Lockheed Martin Corp. obtain grossly inflated pricing, the Justice Department alleged.

In addition to serving at times as the Mission Support Alliance president, Armijo also was a vice president of Lockheed Martin Corp., the lawsuit said.

Hanford officials allegedly paid kickbacks

The Justice Department said some employees, including Armijo, told DOE that the subcontractor’s pricing did not contain any additional profit for the subcontract for the same work on which Lockheed Martin Corp. was already earning profit through its ownership of Mission Support Alliance.

The millions of dollars that Armijo and other employees were paid in cash and stock as part of an incentive program amounted to kickbacks for improperly using their Mission Support Alliance positions to provide favorable treatment for Lockheed Martin Corp., the Justice Department alleges.

Olsen paid $124,440 in August to resolve his liability and agreed to cooperate in the federal investigation. He denied any wrongdoing in agreeing to the civil settlement.

DOE identified the possibility of fraud to the DOE Office of Inspector General and the Department of Justice, said Joe Franco, deputy manager of the Hanford DOE Richland Operations Office.

“DOE will not tolerate fraudulent behavior by its contractors and will continue to strengthen its federal oversight at Hanford,” he said in a statement.